Intel CEO Paul Otellini expects insider to replace him

Reuters

Posted:
12/06/2012 12:08:58 PM PST

Updated:
12/06/2012 12:16:37 PM PST

Click photo to enlarge

In this Tuesday, Jan. 10, 2012, file photo Intel president and CEO Paul Otellini speaks during his keynote address at the 2012 International CES tradeshow, in Las Vegas. Intel says its CEO, Paul Otellini, plans to retire in May 2013 after nearly 40 years with the company. Intel's board will look at company executives as well as external candidates to replace Otellini, and on Monday promoted three executives to executive vice president. (AP Photo/Julie Jacobson, File)

SAN FRANCISCO -- Intel's (INTC) outgoing chief executive, Paul Otellini, said he expected to be replaced by a company insider and also signaled that the top chipmaker could open its factories to strategic customers.

"For the right types of products and not to enable my competitors, I would certainly consider it. There's a lot of stuff in the pipeline," Otellini said, according to a Thomson One transcript.

"As you know it takes a while to move your designs over, to design them under our process, for us to be able to bring them in-house and so forth and our foundry customers aren't going to announce that they've moved until they've moved because it would hurt them at their current suppliers," Otellini said.

RBC analyst Doug Freedman said Otellini's comments about the possibility of open Intel's plants to customers were more direct than previous ones.

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Apple currently depends on Samsung Electronics to manufacture its mobile chips but the two companies are in a war over patents and also compete in smarpthones and tablets. Apple is believed to be looking for alternative suppliers.

Intel raised eyebrows on Wall Street and in Silicon Valley in November when it said it will consider an outsider to take over after Otellini unexpectedly announced he will retire in May, potentially ending a four-decade tradition of internal succession.

Some analysts took that as a sign that Intel, which has struggled to jump from the personal computer market to mobile, might be considering a transformative hire. But Otellini he expects the board to choose from among the chipmaker's own executives.

"It's not up to me but I think that's the most likely outcome. I'm very comfortable with the internal candidates and the track record of internal versus external in our industry shows pretty clearly you want to stay inside if you can," Otellini said.

While the idea of an iconic visionary stepping in to lift Intel into the mobile market - its Achilles heel - may sound attractive, it could open the chipmaker to new risks should it waver from its traditional focus on hard-core manufacturing.

"Even if you brought in Mr. or Ms. Perfect, that person is going to take whatever it is, two years to figure out the culture and the people and how systems work and stuff like that," Otellini said.

"In this environment, why take the risk and take the time? So I think they will stay inside."